–Aakash Samanta (Class of 2021, IBS Hyderabad)
Description
Amidst the recession in the global economy, nothing is going right for Chinese economy as well. First being the US -China Trade war and now most recently the deadly disease Coronavirus resulting in deaths of more than 2000 innocent lives in a month, giving out negative figures in growth and development. The second largest economy in the world is now fighting for revitalization and stabilization of growth in the country.
What is Coronavirus?
Coronavirus is a group of RNA viruses that cause a variety of diseases in human and other animals. According to World Health Organization( WHO), the detailed investigations found that SARS-CoAv was transmitted from civet Cats to human beings and MERS-CoAv from dromedary camels to humans. A deadly disease was scientifically proved to be originated from a research laboratory in China. Scientists are on full swing to find the remedy and saving the lives.
China’s Economy in deep trouble
Under the heavy fire as coronavirus outbreaks factories, the disrupted supply chain is set to shock the China’s slowing economy. China being the major exporter in the world is now facing the delay in the production schedule. Deutsche Bank forecasts that, due to current coronavirus ,China saw a dramatic decline in the growth by 1.5% in the first quarter of 2020 when compared with last year. At growth of 4.6% global growth is expected to be 0.5% slower. The Economics Consultancy from Oxford Economics predicted the heavy decline in the tourism industry in the major cities like Wuhan (the epicenter of crisis)which have been shut down, giving the downward trend in the tourism sector. GDP decline is a major concern for Chinese which is giving alarming figures at world economy as the prices of electronic components exported from China like Xiomi have inflated 3 times than the original rate due to the drastic increase in demand. Asian emerging economic centers are exposed to stoppages and causing the negative growth.
Market Sneezes as coronavirus outbreaks
Major retail outlets and service sectors are facing a setback and lack of foot-fall in the markets have shown an exponential decline with the time. The coronavirus scare led to sheer the mayhem in global equity market. The rapid spread of deadly virus could nudge the global economy into a recession. With the large markets like the US and Europe market crashing deep into a downward trend. On February 28, 2020 Indian market had faced the second biggest single fall in the history as BSE Sensex tanked 1448 Points. Investors lost nearly ₹10 Lakh crore as 25 BSE Stocks hit the rock bottom,fearing that the spread of the coronavirus is tipping the global economy into a recession, handed the stock market its largest weekly loss since the 2008 financial crisis amid worries that one of the longest economic expansions in history may be coming to an end.
How world reacts?
With the virus now detected in at least 56 countries, companies are readjusting their annual profit expectations, economists are lowering their forecasts for global growth and policymakers have signaled that they are ready, if needed, to act to stabilize the economy.
Tourism Industry: A Major Concern
China is the single largest outbound travel market in the world in the terms of spending,” as told by Economist Mathew Dass.
As the deadly disease spread right and left have grounded the tourists and the travelers across the globe. Downgrading of tourist industry had lead to low occupancy in the hotel rooms throughout the Asia affecting majorly in the hospitality sector. If we look at South Korea and Italy, we will see both cancellations and we will see declining (revenue per available room) in those markets.The outbreak is expected to reduce the global traffic by 4.7% whipping out IATA’S( Interantional Air Transport Association) since the global financial crisis of 2008-09.
In the wake of its outbreak, countries around the world are trying to implement measures to control the spread of Virus. Italy, which had confirmed more than 600 confirmed cases of COVID-19 hosted a football match between Bulgaria’s Lugogrates and Internazionle in an empty stadium.
Conclusion
The future although remains a mystery and uncertain as China is facing the biological war. Although there are no vaccinations and medication available for the fatal disease, we need to come together to fight with a common enemy that doesn’t respect borders and we need to find the resources which could curb its end for a fruitful health and the economic growth.
References
https://www.who.int/news-room/detail/12-02-2020-world-experts-and-funders-set-priorities-for-covid-19-research
https://www.ft.com/content/e9fbbb78-4901-11ea-aeb3-955839e06441
https://edition.cnn.com/2020/02/28/business/global-tourism-novel-coronavirus/index.html
https://www.indiatoday.in/trending-news/story/coronavirus-scare-in-italy-forces-milan-to-hold-football-match-in-empty-stadium-1650920-2020-02-28
